The principal sponsor of the project is the Overseas Private Investment Corporation (OPIC). OPIC is an independent U.S. government agency whose mission is to mobilize and facilitate the participation of U. S. private capital and skills in the economic and social development of less developed countries and areas, and countries in transition from non market to market economies. OPIC assists U.S. companies by providing financing (from large structured finance to small business loans), political risk insurance, and investment funds. OPIC complements the private sector in managing risks associated with foreign direct investment and supports U.S. foreign policy. OPIC was established as an agency of the U.S. government in 1971 and currently operates in over 150 countries. Other participants in the project are expected to include the Palestine Investment Fund, Bank of Palestine, Cairo Amman Bank, and Department for International Development of the Government of UK, CHF International, and the Middle East Investment Initiative of the Aspen Institute.

The total project cost is approximately $ 488,174,046 million. IFC’s investment is comprised of up to $75,400,000 million in guarantees for mortgage loans made under the program.

75.40 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	75.40
Loan
Equity

* These investment figures are indicative

The project shall operate initially in the West Bank. Commencement of the project in other geographic areas otherwise eligible for support, such as Gaza, shall be subject to the unanimous agreement of the Lenders.

The Development Impact of this project is likely to be high. The specific development impacts of this project would be: Significant improvement to the enabling environment for the creation of a viable housing finance market in West Bank. Institutional and legal constraints today create major obstacles to mortgage lending. It is expected that the removal of such obstacles particularly registration of titles, difficulty of foreclosures will encourage lenders to come into the market and scale up their lending programs. Access to finance for middle and low income individuals. The project will make affordable, long term home finance available to a significant number of people in the low and middle income brackets. The homes financed will help improve the living standards of the borrowers as they get access to safe and more spacious housing as compared to the overcrowded and cramped conditions they currently face. The longer term of the mortgages to be provided under the program will play a major role in making homes more affordable by reducing the monthly payments to a level that could be serviced by a broader segment of the population. Boost to the construction sector: Although the program is intended to fund only mortgages and not construction, the creation of effective demand by the financing available under the program will encourage developers to take a more active approach in developing their projects as the risk to them will be reduced by an increase in the number of potential buyers. The program may include financing of progress payments for booking of units in multifamily housing developments in the construction phase. Restarting the mortgage market. As the program will be making mortgages under a difficult environment, it would be sending a positive signal to other institutions. The success of the project would encourage other entities to come into this market and help build a more sustainable housing finance market in West Bank.

While the project could proceed without IFC, clearly it would not be as effective as it would be with IFC’s presence. IFC is expected to contribute its extensive experience in the development of primary mortgage institutions, using structuring techniques to deal with complex risks, and wide sectoral knowledge. Stakeholders in the project are looking to IFC for guidance on several aspects of this effort. IFC’s presence in the governance of this program will also be critical to ensuring effective governance standards and practices.